[Congressional Record Volume 149, Number 104 (Tuesday, July 15, 2003)]
[Senate]
[Pages S9421-S9422]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN (for herself and Mr. Durbin):

  S. 1409. A bill to provide funding for infrastructure investment to 

restore the United States economy and to enhance the security of 

transportation and environmental facilities throughout the United 

States; to the Committee on Finance

  Mrs. FEINSTEIN. Mr. President, I rise to introduce the ``Rebuild 

America Act of 2003,'' a bill to improve our national transportation 

and water infrastructure and to stimulate economic growth.

  This bill promises to do what the latest tax cut will not: provide an 

immediate economic stimulus without increasing the Federal budget 

deficit. Whereas the President's economic advisors have said that the 

latest tax cut will create 1.4 million jobs by the end of 2004, at a 

cost of $350 billion, this bill will create as many as 2 million jobs 

at a tenth the cost.

  These jobs could be created in as little as three months, as the bill 

is specifically designed to fund transportation and water 

infrastructure projects which are ready to go within 90 days.

  Not only would those jobs bring some of the 9 million Americans who 

are unemployed and seeking jobs back into the workforce, it would 

generate long-term economic benefits from the increased productivity of 

our transportation infrastructure.

  This bill will do more to stimulate the economy at less cost than the 

tax cut because it is directed squarely at our most urgent needs. 

Unlike the recent tax cut, which largely benefits high income taxpayers 

who are likely to save any windfall they receive, infrastructure 

spending is necessarily injected into the economy.

  According to the Department of Transportation, each $1 billion in new 

infrastructure investment creates 47,500 new jobs: 26,500 direct jobs 

for construction workers, engineers, contractors, and other on-site 

employees, and 21,000 indirect jobs resulting from the spending 

associated with the investment.

  These are jobs our economy desperately needs, particularly in the 

transportation and nonresidential construction sectors, which have been 

hit hard by the recent downturn. While new home construction has 

sustained the homebuilding trades, there are now 715,000 unemployed 

private construction workers, most of whom were laid off due to a 

downturn in nonresidential building. That represents an 80 percent 

increase from three years ago.

  As anyone who has taken a hard look at our transportation needs can 

attest, federal funding for highways, transit, aviation, high-speed 

rail, and ports, among other areas, remains inadequate.

  Without those funds, we are on the verge of falling behind the rest 

of the developed world in the quality of our infrastructure. I recently 

visited the port of Hong Kong and was amazed by the automated 

technology used to process thousands of containers each day with fewer 

employees than would be required to move an equivalent amount of cargo 

at even our most advanced ports.

  And while many countries around the world, including France, China, 

Germany, and Japan, now have operating MAGLEV train systems, the United 

States does not have a single demonstration MAGLEV line operating 

anywhere in the country.

  Increasingly, global industry demands a level of efficiency and 

reliability which requires substantial upgrades to existing 

infrastructure. In California, where computer and electronic products 

account for 51 percent of the State's manufacturing exports, the trend 

is toward lighter, higher value shipments. Nationwide, shipments of 

below 1,000 lbs accounted for 18 percent of total value in 1977, and 32 

percent of value in 1997, a dramatic increase.

  Those changes put a premium on speed and reliability, without which 

``just-in-time'' manufacturing and lean inventory controls are 

impossible. A company such as Hewlett Packard, which uses Intel 

processors made in California in servers which it assembles in Texas, 

must be able to ship processors without risk of even a 24-hour delay.

  This bill takes a big step toward ensuring that level of speed and 

reliability by dedicating $50 billion to infrastructure upgrades. And I 

must stress the huge incremental value of that spending in the context 

of reauthorization of the Transportation Equity Act for the 21st 

Century, TEA-21, which is expected this year.

  Reauthorization of TEA-21 will dedicate more than $250 billion toward 

transportation projects over the next six years, but even that level of 

funding will only allow us to tread water. Maintenance of existing 

infrastructure will consume much of that spending.

  To take one example, the Department of Transportation estimates that 

$20.6 billion is needed annually to maintain and improve performance of 

public transit systems alone.

  The $50 billion provided by the ``Rebuild America Act'' will go 

beyond current maintenance and actually improve overall productivity by 

allowing substantial upgrades to go forward. Specifically, the bill 

provides:



       $5 billion in additional authority for Federal-aid highway 

     capital investments, drawn from the $19 billion surplus in 

     the Highway Trust Fund.

       $3 billion in transit capital and operating grants, drawn 

     from the surplus in the Highway Trust Fund.

       $3 billion in airport development projects, including $2 

     billion in airport improvement program grants to enhance 

     airport safety, efficiency, and capacity.

       $14 billion of tax-credit high-speed rail bonds for 

     infrastructure construction and the acquisition of rolling 

     stock.

       $7.5 billion for capital investment in passenger and 

     freight rail, including $2.5 billion for Amtrak.

       $2.5 billion for port security grants to ports and marine 

     facility operators.

       $11.5 billion for wastewater and drinking water 

     infrastructure, to be administered





[[Page S9422]]



     through the existing Clean Water State Revolving Fund and 

     Safe Drinking Water State Revolving Fund.

       $1.5 billion to fund investment in currently authorized 

     water resources infrastructure projects.

       $1.5 billion in grants to economically distressed 

     communities for economic development.

       $500 million for the repair and alteration of Federal 

     buildings.



  In my home State of California, the infrastructure needs that could 

be addressed by this bill are particularly great. Although the just-

completed BART link to San Francisco International Airport is a major 

achievement, we still remain a long way off from the long-term goal of 

ringing the Bay Area with BART stations.

  And despite the recent economic downturn, California's economy 

remains the engine of much of the country's economic growth, and 

California's population continues to grow. That puts tremendous demands 

on our roads, airports, and transit systems, and is one reason why Los 

Angeles and the San Francisco Bay Area are consistently ranked as the 

top two urban areas in the U.S. with the longest annual delays per 

rush-hour driver.

  This bill will provide a total of $1.8 billion in new funds for 

California transportation and safe drinking water infrastructure, and 

more than $1.5 billion more for high speed and passenger and freight 

rail. All told, the bill will create well over 100,000 new jobs in 

California.

  That could bring us farther toward fulfilling one of California's 

most urgent needs, a high speed rail link from the Bay Area all the way 

south to San Diego. Without high speed rail there is little hope of 

taking some of the pressure off of California's over-burdened highways 

and airports.

  In addition to the transportation improvements contemplated by the 

bill, I would like to say a few words about the need for additional 

funds for port security and clean drinking water.

  Since the attacks of September 11 it has become clear that our ports 

should be one of the first lines of defense against attempts to bring 

weapons of mass destruction into this country. And yet the funds we 

have dedicated to securing our ports have been woefully inadequate.

  Last year I introduced comprehensive legislation to improve security 

at our ports, and to inspect more of the 16 million containers which 

come through those ports each year. Currently, only one to two percent 

of those containers are inspected, and the possibility of a dirty bomb 

or nuclear device being shipped in via container remains alarmingly 

real.

  This bill provides an additional $2.5 billion for port security, 

which would go some of the way toward meeting the $6 billion in 

expenses the Coast Guard anticipates over the next 10 years for ports 

to comply with security standards imposed under the Maritime 

Transportation Security Act.

  With respect to clean drinking water, a very different, but equally 

important, priority, this bill provides $11.5 billion for wastewater 

and drinking water infrastructure investment. That funding is important 

because the Administration continues to insist on funding cuts for the 

Clean Water and Safe Drinking Water State Revolving Funds.

  Even level funding will not allow us to upgrade existing water 

treatment facilities, many of which were built in the 1970s, when the 

federal government first began to take a major role in the construction 

of drinking water infrastructure. Many of those facilities will require 

substantial improvements and overhauls over the next two decades as 

pipes and equipment fall into disrepair.

  In the West, the magnitude of water supply contamination by 

perchlorate, a chemical used in rocket fuel, has only recently become 

apparent. The costs of cleaning up perchlorate in California alone will 

likely stretch into the billions of dollars, and some of those funds 

must come from the Safe Drinking Water State Revolving Fund, which 

would receive $1.5 billion under this bill.

  With the Federal budget deficit certain to top $400 billion this 

year, and with the gross federal debt projected to increase by over $5 

trillion by 2013, there is a real question as to where these funds will 

come from.

  I am glad to say, therefore, that this bill is fully offset and would 

not add at all to our deficit. The bill uses three offsets to recoup 

the $34 billion cost of the bill, two of which are designed to limit 

corporate fraud, and the last of which extends customs user fees.

  The bulk of the funds used to offset the bill are generated by 

limiting the ability of large corporations to shelter income from 

taxation. A recent report by the Joint Economic Committee on corporate 

fraud at the Enron Corporation speaks to the magnitude of this problem.

  For several years Enron reported huge profits to its shareholders, 

while reporting little or no taxable income to the IRS. We now know 

that Enron executives treated their tax division as a for-profit entity 

within the company and set annual revenue targets for the division.

  Between 1996 and 1999, Enron reported aggregate profits of $2.1 

billion on its income statement, while claiming aggregate losses, for 

tax purposes, of $3 billion. Some of that gap can be explained by the 

massive tax deductions Enron took for employee stock deductions, and 

the rest stemmed from the closely guarded tax-shelter transactions 

designed for the company by banks, accountants, and legal firms.

  This bill closes those Enron-specific loopholes, but also strengthens 

a very simple provision which will have a big impact on shutting down 

future loopholes.

  The so-called ``Economic Substance Doctrine'' imposed by the bill 

states that any transaction which has no material economic impact on 

the business of the company, but which is purely designed for the 

purpose of tax avoidance, shall be disallowed for tax purposes.

  That will allow enhance the ability of tax courts to crack down on 

companies that engage in off balance sheet transactions, artificial 

income shifting, uneconomic financing transactions, and other tax 

avoidance schemes which are not designed to provide any profit to the 

company beyond a tax savings.

  In the same vein, the bill puts an end to the practice of setting up 

corporate headquarters offshore in order to avoid corporate taxes at 

home. This practice is not only blatantly unpatriotic, but also creates 

an imbalanced playing field for companies that abide by the spirit of 

the law but are forced to compete with firms that don't.

  This bill will require such corporate expatriates to continue to pay 

U.S. taxes even if they move abroad. All told, these provisions fully 

offset the cost of the infrastructure improvements included in the 

bill.

  Just about any American you talk to will tell you that our economy is 

not in good shape. A quick look at the front page of newspapers shows 

that our stock markets remain well below their 2000 high, that more 

people face long-term unemployment than at any time in the past two 

decades, and that businesses are not making new investments.

  The tax cut which was recently signed into law is the wrong medicine 

for our economy, and will do little to reverse our current course. In 

fact, it may well increase uncertainty and act as a long-term drag on 

the economy by increasing the federal debt and putting pressure on 

long-term interest rates.

  I urge my colleagues to support this bill as a much better means of 

stimulating economic growth, and one which will pay long-term dividends 

in terms of improved roads, railways, and water treatment facilities.

  Rather than simply hand down a burden of debt to our children and 

grand-children, this bill would create a lasting legacy of modern 

infrastructure for their benefit.

                                 ______